Bali Tourism Will Suffer form Higher Alcohol Taxes

Bali Business Leader Sees Threats and Opportunities in Higher Taxes on Imported Alcohol.

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(4/12/2010)

BisnisBali reports that high taxes in the form of customs and excise tax applied on imported alcohol are a great concern for Bali business people.

Threatened tax increases of as much as 300 percent have the potential of damaging Bali tourism where the consumption of alcoholic beverages is an important part of a holiday visitors experience.

"High import duties (and taxes) inflate the price. The high taxes also will increase the incident of smuggling," said Panudiana Kuhn, the Chairman of the Provincial Entrepreneurs Association (APINDO).

Panundiana, who is also an entrepreneur in Bali's hotel and garment sectors, acknowledged the government's right to increase alcohol prices, but bemoaned the possibility of increases up to 300%, arguing that sudden increases in alcohol costs can cause tremendous short-term damage to the island's tourism.

At the same time, Panudiana admitted that huge tax increases carry the less-obvious positive effect of creating opportunities for local alcohol producers who can create quality beverages able to compete with imported products. "I am confident that producers of arak, berem, tuak and Balinese wine – if produced at a good standard – can secure a share of the existing market," he said.

Meanwhile, the provincial government of Bali's chief of Industry and Trade Department, I Gede Darmaja, is convinced that price increases are inevitable. His department will soon meet with distributors to discuss the situation.